Russian Wheat Exports Threatened by Ruble Gains, EU Supplies

A strong ruble is threatening to slow Russia’s wheat exports as grain from Ukraine and European nations including France remains cheaper.

While consultants at SovEcon say Russian wheat prices fell by $2 a metric ton last week, they were still more than $20 above French prices and about $6 more expensive than in Ukraine, according to Bloomberg calculations. The ruble gained over the past three months, making exports priced in dollars less attractive.

If the ruble doesn’t weaken, “exports are likely to fall sharply soon,” Andrey Sizov Jr., managing director of Moscow-based SovEcon, said Friday on his Twitter account. Shipments could start slowing this month or the next, he said by e-mail Tuesday.

Russian wheat with 12.5 percent protein content was at $193 a ton Friday, down from $195 a ton a week earlier, according to SovEcon. Ukrainian grain of the same quality was at $186.50 a ton on Thursday, said UkrAgroConsult. The Office National Interprofessionnel des Grandes Cultures priced French grain with a minimum protein content of 11 percent for loading at the port of Rouen at $167 a ton Friday.

Ruble Impact

There are already signs a strong ruble is starting to affect shipments. The pace of Russia’s wheat exports has been slowing for about a month now, data from Federal Customs Service showed. Exports rose about 310,000 tons in the week ended April 27, down from an increase of 540,000 tons in the seven-day period to March 30.

A weakening euro against the dollar is making supplies from the European Union more attractive, French farm adviser Agritel said in a report on its website Tuesday. The euro declined in the previous five days, the longest losing run since March 25.

The euro’s retreat “is bringing a support factor to export business in a context where European prices remain attractive both for spot or forward deliveries,” Agritel said.

Russia will probably export a record 25 million tons of wheat this season, the government estimates. Bumper crops globally are keeping international prices low and making a sliding tax on Russian wheat “irrelevant,” according to the Institute for Agricultural Market Studies, or Ikar. Trading companies have been paying the minimum tax since October, said the National Association of Exporters of Agriculture Products, representing companies including Cargill Inc.

Russian wheat prices were assessed by Ikar at $192 to $193 a ton, up from $190 to $191 a ton last week, Dmitry Rylko, a director at Ikar, said by e-mail.

“We continue to observe growing shortage of grains across South Russia,” he said.